The administration of Ho Chi Minh City has written to the Ministry of Finance urgently seeking additional capital allocation for the financially-distressed Ho Chi Minh City Urban Railway No. 1 Company Limited (HURC1), which will operate metro line No. 1 in the city.
The metro line No. 1, which links the iconic Ben Thanh Market in District 1 with Suoi Tien Theme Park in Thu Duc City, is slated for completion by the end of this year after several delays.
The municipal government has repeatedly proposed relevant ministries and agencies take measures to address the financial distress facing the metro operator, but almost nothing has been done as yet.
Established in 2015, the wholly state-owned HURC1 was granted VND14 billion (US$593,700) in charter capital to purchase office equipment.
Since then, it has yet to be allocated extra funding, leaving the company with insufficient finances for a long time and thus affecting its personnel recruitment and training plan to serve the metro line operations.
The municipal administration told the finance ministry that if the government issues a resolution on raising the charter capital of HURC1, the company could have funding to maintain its operations and receive technology transfer to be able to operate the metro line.
The capital allocation, however, faces some obstacles.
As HURC1 has neither generated revenue nor met criteria for business performance evaluation, the firm is not eligible to be allocated further charter capital as per prevailing regulations.
Therefore, the Ministry of Finance, the Ministry of Planning and Investment, and the municipal administration jointly sought the national government’s nod to issue the resolution mentioned above.
Meanwhile, the Ministry of Justice did not endorse the issuance of the resolution, saying that a government resolution is not a legal document.
The Ministry of Justice, instead, suggested revisions and adjustments to the prevailing regulations on charter capital to pave the way for capital allocation for HURC1.
According to the HURC1’s establishment plan, the company would be given VND14 billion in charter capital in the 2015-17 period. The figure would be VND16.788 billion ($714,990) from 2018 onward.
The city’s administration proposed a plan adjusting regulations on the establishment of the company, so that the charter capital would not be allocated by phase as before.
The city will inject VND268 billion ($11.3 million) into the company’s charter capital as a temporary solution to ensure its stable operations to receive technology transfer to operate the metro line.
The metro line No.1, the first among the eight planned metro line projects in the southern metropolis, carries a price tag of VND43.7 trillion (US$1.84 billion).
It spans 19.7 kilometers from Ben Thanh Station in District 1 to Long Binh Depot in Thu Duc City under Ho Chi Minh City, including 2.6 kilometers of underground railways and 17.1 kilometers of elevated sections.
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